Navigant Research Blog

Energy Efficiency Is Not Lost in the Supermarket

Christina Sookyung Jung — July 18, 2016

ControlsLast month, national grocery store chain Trader Joe’s made headlines when it agreed to reduce greenhouse gas emissions from refrigeration equipment at 453 of its stores. The federal government alleged that Trader Joe’s had violated the Clean Air Act by failing to repair leaks of R-22, which is used as a coolant in refrigerators but which also depletes the ozone and has 1,800 times more global warming potential than CO2. In addition, the government alleged that the company failed to keep appropriate service records.

Under the proposed settlement with the U.S. Department of Justice and the U.S. Environmental Protection Agency, Trader Joe’s will spend an estimated $2 million over the next 3 years to reduce its leak rate to less than half the average in the grocery store sector and to use non-ozone depleting refrigerants at all new stores. It also agreed to improve its leak monitoring and recordkeeping. This is the third settlement federal authorities have reached with a national supermarket chain over refrigeration practices. Previously, Safeway agreed to pay $600,000 in penalties and reduce its emissions in 2013. The following year, Costco also agreed to pay $335,000 in penalties and take similar emissions-reducing actions.

Reducing Operating Costs

An average-sized grocery store releases 1,900 tons of carbon emissions annually. By reducing the amount of ozone-depleting refrigerants and potent greenhouse gases, the Trader Joe’s settlement will help address major global environmental problems. An added benefit of repairing refrigerant leaks is improved energy efficiency of the system, which can save electricity. In fact, supermarkets are one of the most electricity-intense types of commercial buildings due to the large amount of power needed for food refrigeration. Refrigeration accounts for around 50% of electricity consumption in supermarkets. Every year, an average-sized grocery store spends more than $200,000 on energy costs. Consequently, energy efficiency technologies that help reduce energy consumption can significantly reduce operating costs and improve profit margins. According to ENERGY STAR, a 10% reduction in energy costs can boost net profit margins by as much as 16%.

Fortunately, there are ample energy efficiency and emissions-reducing investment opportunities for the retail sector. Some efficiency upgrades specifically target the supermarket segment and refrigeration practice. For example, Axiom Exergy’s Refrigeration Battery stores cooling, not electricity. The battery stores refrigeration when electricity costs are the lowest and deploys it when electricity costs are the highest, reducing on-peak demand by up to 40%. Thermal storage tanks and software optimizing the charge cycle can be easily added on to an existing system.

The Retrofit Market

The average supermarket size in the United States is 47,000 square feet, placing these stores in the small and midsize building class. Navigant Research defines small and medium commercial buildings (SMCBs) as those ranging from less than 10,000 square feet up to 100,000 square feet, and most supermarkets fall under this class. While approximately two-thirds of the global building floor space is occupied by SMCBs and more than 90% of commercial buildings are small or midsize, SMCBs have not yet seen the same penetration of energy efficiency technologies as larger facilities. However, with the largest commercial buildings already engaged in energy efficiency retrofits, the focus is expected to shift to SMCBs. According to Navigant Research’s Energy Efficiency Retrofits for Small and Medium Commercial Buildings report, the SMCB retrofit market is expected to grow from $24.1 billion in 2016 to $38.6 billion in 2025.

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